the Law of One Price. |
The bond certificate typically specifies that the coupons will be paid periodically until the maturity date of the bond. |
We should use the general dividend discount model to value the stock of a firm with rapid or changing growth. |
7. (TCO D) A bond has 5 years to maturity and has a YTM of 8%. Its par value is $1,000. Its semiannual coupons are $50. What is the bond’s current market price? Show your work.(Points : 20)
8. (TCO D) A bond currently sells for $1,000 and has a par of $1,000. It was issued two years ago and had a maturity of 10 years. The coupon rate is 7% and the interest payments are made semiannually. What is its YTM? Show your work. (Points : 20)
9. (TCO D) A stock has just paid a dividend and declared an annual dividend of $12.00 to be paid one year from today. The dividend is expected to grow at a 7% annual rate. The return on equity for similar stocks is 12%. What is P_{0}? Show your work. (Points : 20)
1. (TCO A) The DuPont Identity expresses the firm's ROE in terms of? Explain in details. (Points : 20)